Real Estate 2019: Market Trends
The big buzz towards the end of 2018 was that the market was shifting and in transition. Now that we’re into 2019, I’m getting a lot of questions about what to expect going forward. In a word: change.
Let’s take a look at what to expect.
In the Real Estate Industry
Expect to see more consolidation on the Brokerage level. There are simply too many non differentiated brands for them all to survive.
NYC based Compass has been gobbling up competitors and rapidly expanded during 2018 adding market share all over. They’ve been particularly successful acquiring some of the large regional players. Unfortunately, their tech rollouts may not have gone quite as well as they expected (based on a letter from the Compass CEO published in Inman news).
So while they have done a great job on agent recruitment and retention, what has really been fueling their growth has been investor capital and we all know how that story ends.
The iBuyer craze may very well turn out to be DOA. It is one thing for speculators to acquire homes in a market that is going up. But now that prices have leveled off, and in some instances declined, that’s a lot more risk than most will want to take. To the extent that the iBuyers are willing to do acquisitions, their offer prices may simply be too far below what sellers will accept.
That potentially leaves a lot of room for the discount brokerages. If sellers can’t get the price they want on the sale, the only other place to put more money in their pocket is through reduced commission rates. Unfortunately most of the discounters have very inexperienced agents and also wind up selling properties for less than market value.
On the agent level, the large agent teams may not be sustainable. Ostensibly, the reason agents join teams is that there is a consistent flow of business. If that dries up a bit, expect to see some agents strike out on their own which diminishes the benefit of the team.
Another trend that may be seeing its last gasp is the off market / pocket listing. We really did hit a point in the last cycle where many buyers actually said something to the effect of “don’t show me anything in the MLS”. Really.
But in a more balanced market what seller would not want their home exposed to the most buyers?
Where might we be going?
A new round of tech innovation, consolidation of the regional MLS systems, and a change in the business model.
What might that look like? Stay tuned for future posts.
For Buyers and Sellers
Expect 2019 to be a great time to be a buyer and just ok to be a seller. My data indicates that we may have hit a temporary market high during June-July of 2018. While prices haven’t really declined much from that point, they certainly have not increased in any measurable way.
The big change for buyers is a) more inventory to choose from and b) more room to negotiate. For buyers this means less pressure to make offers and waive various contingencies.
While interest rates were up considerably in late 2018 compared to the same period a year earlier, as of this posting in Jan 2019, mortgage rates have declined closer to the 4% level. Between 4-4.5% is where buyers seem most engaged to me.
Sellers can not expect to sell as quickly as a tear ago, get multiple offers, or negotiate as favorable terms as previously. That means your home may be on the market for 30-60 days (or longer depending on price range) and you may have to actually do some repairs.
All in all, a balanced market may benefit both buyers and sellers.